can someone explain to me how currency speculation work

[h21]

See quote
“investors who believing that currency yield convergence took on highly leveraged long positions in the higher-yielding currencies financed by short positions in the lower-yielding European currencies.”

so how this would crash a country’s currency system? just wondering thanks

 

[krokodilizm]

Shorting=betting that price will go down. It is like a destructive activity. Longing, on the other hand, can be seen as a positive thing, a constructive approach.
So if I long currency A and finance it by shorting currency B it is like I suck out the energy from currency B to transfer it to A.
Read this classic case if you want
http://priceonomics.com/the-trade-of-the-century-when-george-soros-broke/